By and  on January 5, 2010

Fashion, retail and beauty shares roared back from a calamitous 2008 last year as investors rewarded many firms for their surprising ability to navigate the murky waters of the recession and preserve profits despite lower sales.

While 147 of the 172 North American and European issues tracked by WWD were up last year, in some cases the exceptions proved the rule. Among the 25 decliners last year was Wal-Mart Stores Inc., the world’s largest retailer, whose shares were off 4.7 percent from the final trading day of 2008 to its 2009 counterpart. But Wal-Mart, armed with its discount pricing and dominant market position, completely sidestepped the stock erosion that hit most retailers in 2008 as its shares appreciated 22.6 percent, while the S&P Retail Index declined by nearly a third that year — 31.9 percent.

By contrast, the S&P Retail Index last year tacked on 47.2 percent to end the year at 411.12 as stores reassumed their customary role as early indicator stocks and assumed a new one as adept managers of cost and inventories. Oddly enough, the retail index’s 131.86 point elevation last year left it less than 2 points ahead of its 409.94 resting place at the conclusion of 2007.

The aggregate value of the shares of the companies followed by WWD — which include apparel, accessories, retail, beauty and real estate firms on both sides of the Atlantic — rose 5.8 percent last year.

Some of the strongest performances in 2009 came from companies which, if not necessarily written off by investors, weren’t thought to be well prepared for the stiff challenges of retail consolidation, never mind the unprecedented perils of the worst economic downtown since the Great Depression. The Bon-Ton Stores Inc. outperformed all stocks on WWD’s list with an 855.3 percent increase to $9.84 a share, with much of the upward movement coming after it cut its third-quarter losses and refinanced a significant portion of its debt.

Likewise, Dillard’s Inc. was up 364.7 percent for the year, aided by a third-quarter profit that took analysts by surprise, a substantial increase in gross margins and meaty reductions in inventories and expenses.

While some stocks were rewarded based on the strength of their performance, including J. Crew Group Inc. with its 266.7 percent appreciation, others simply appeared to have weathered the storm better than some had anticipated.

Misses’ chains faced daunting challenges, including seemingly disinterested customers and little fashion direction, even before the meltdown of September 2008, and seemed ill prepared for the violent headwinds of a recession. While The Talbots Inc.’s 272.8 percent rise was unquestionably helped by the retirement of $491 million in debt when it secured a new majority owner last month, competitors Chico’s FAS Inc., Charming Shoppes Inc. and AnnTaylor Stores Corp. saw their shares rise 236.1 percent, 165.2 percent and 136.4 percent, respectively, without changes in ownership.

The luxury market offered a study in contrasts last year. Few sectors of the economy were battered as badly in late 2008 and faced as steep an uphill climb in 2009. Nordstrom Inc. demonstrated merchandising flexibility and fiscal discipline and came out of the year with a 182.3 percent increase in its share price, while the higher-end Saks Inc. studied every aspect of its business and struggled with double-digit same-store sales declines, finishing last year with a 49.8 percent stock jump.

Tiffany & Co. shares were up 82 percent last year and those of Coach Inc. 75.9 percent. After losing about a quarter of their value in 2008, shares of Polo Ralph Lauren Corp. were up 78.3 percent in 2009.

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